New Zealand to start protecting bank deposits of most savers

FILE – In this May 17, 2018, file photo, New Zealand Finance Minister Grant Robertson discusses his budget plan in Wellington, New Zealand. New Zealand remains one of the few developed countries where people with bank savings have no recourse if their bank fails, but the government said Monday, June 24, 2019 that’s about to change. (AP Photo/Nick Perry, File)

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WELLINGTON, New Zealand (AP) — New Zealand remains one of the few developed countries where people with bank savings have no recourse if their bank fails, but the government said Monday that’s about to change.

Finance Minister Grant Robertson announced plans for a program aimed at individual account holders that would guarantee bank deposits of up to 50,000 New Zealand dollars ($33,000).

Robertson said the scheme would fully protect about 90% of savers, and would cover about 40% of the total NZ$352 billion kept in bank deposits.

“This is about tipping the balance in favor of the depositor, of the people who banks are there to serve,” Robertson said.

He said some details are still being worked through and he expects the program to be finalized into legislation next year.

The announcement came as part of a wider banking system review aimed at making banks and their executives more accountable.

New Zealand was forced to introduce a temporary deposit protection program after the 2008 global financial crisis but never used it because no major banks failed.

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